The merger between Uralkali and Silvinit was approved by both companies' boards on Friday, Uralkali said in a statement, with the company acquiring a nearly 20-percent stake in Silvinit for $1.4 billion (1.0 billion euros).

Uralkali said the deal should be completed in May, with the merger creating a giant responsible for 19 percent of the world's potash production, placing it second behind Canada's Potash Corp, which has a 23-percent share of the market.

Uralkali is Russia's second-largest potash producer behind Silvinit.

"We are excited about the creation of a leader in the global potash sector and the opportunities that will arise in this highly dynamic industry for the combined group," Uralkali CEO Pavel Grachev said in a statement.

Russia is the world's second-largest producer of potash behind Canada and ahead of Belarus, according to the United States Geological Survey.

The importance of potash fertiliser has soared over the last years owing to mounting demand for food in the world. Rapidly-expanding China, which has also expressed an interest in Potash Corp in light of the BHP Billiton bid, is a major importer of the product.